Klarna, GoCardless A2A Pact Spotlights BNPL’s Continued Traction Over Bank Rails  

For the continued uptake of buy now, pay later (BNPL), for debit, too, it’s the rails that will make the difference.

Against that backdrop, Klarna is enabling account-to-account payments via bank rails for their purchases, in a bid to make further inroads against credit cards.

Klarna, which is based in Sweden, said on Tuesday (Dec. 14) that U.S. users of its BNPL app can pay installments through direct transfers from their accounts, in collaboration with GoCardless.

Also see: Klarna Teams With GoCardless for US Expansion

By offering bank debit payments to its 21 million U.S. customers, as noted in the joint release from the two companies, Klarna expands its reach into that country.

But in terms of the mechanics, as Klarna users opt for Pay in 4 or monthly payments via Klarna financing, direct debit can, per the announcement, “reduce the risk of failed or late payments” while ensuring that consumers need not enter or update card details multiple times.

The embrace of A2A represents a way to further deepen debits entrenchment, here and elsewhere, in an economic climate where consumers find value in spending the cash they have on hand, and in having visible, recurring obligations that help them manage cash flow more efficiently. The payments giants such as Visa and Mastercard showed strong double-digit percentage growth in debit payments — and Visa, for example, said in October that debit card issuance outpaced credit card issuance.

Read more: Visa X-Border Payments Volumes Surge 38% 

Top-of-Mind Option  

The growth of BNPL as a top-of-mind payments option is evident from PYMNTS’ research, which shows that as many as 29 million adult U.S. consumers have purchased at least one item via BNPL in the past year. The research also shows that 43% of all adult U.S. consumers (111 million people) want the ability to use BNPL options to pay for high-value services.

More details: The Next BNPL Horizon Will Expand Access to 83% Who Want to Make Big-Ticket Purchases 

And, as Karen Webster noted in a recent column, the stage is set for BNPL firms – Klarna included – to gain more traction with consumers and merchants, in part by linking apps to their debit cards and bank accounts (enabling A2A transfers).

The eventuality is that consumers and merchants will shift to real-time options – but for now, the A2A debit activity is likely enough to cement loyalty between consumers and their BNPL providers (and othe merchants offering the payment option).

PYMNTS research also shows that nearly two-thirds of consumers who have used BNPL over the last 12 months have increased, or say they will increase, their usage of it, while 70% of non-users say they plan to try it over the next year – setting the tailwind in place for A2A.

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